Economy exposes official ineptitude

via Economy exposes official ineptitude August 15, 2014

THE current economic regression and concomitant problems besieging the nation might be catastrophic in so many ways, but they have proved to be a godsend for those looking for examples of inept men and women who have failed to provide leadership to their nation at a critical time.

The developments are a boon for those seeking further evidence, if any is still needed, to prove President Robert Mugabe and Zanu PF officials have failed to run the country, in particular the economy.

Although they have loads of excuses for failure, irrefutable evidence shows they are not just incompetent but grossly economically illiterate.

However, Mugabe and his government know what problems are affecting the nation and hindering economic recovery and growth. They always articulate the problems well, but lack leadership and workable solutions.

We have also repeatedly pointed out in our opinion-editorial pages and stories that this economy is facing serious structural obstacles to growth, which include the macroeconomic dislocation; banking sector vulnerabilities; external debt overhang and arrears; fiscal crisis; declining capacity utilisation, infrastructure collapse and declining aggregate demand, among others, that must urgently be dealt with, but nothing meaningful has being done about it.

We know cabinet is seized with these economic issues, but their approach is not reformist and progressive. Instead of coming with a serious economic plan, we are given the rather unworkable ZimAsset — a speculative blueprint which any competent mandarin can write sitting on a desktop computer.

Government has piles of similar documents gathering dust in official drawers. The real trouble is Mugabe and his officials won’t listen, hence don’t address real economic issues, but abstract and immaterial stuff on a general plane.

When their attention is drawn to decelerating economic growth, widening current account deficit, an overvalued exchange rate and low international reserves, they don’t pay attention.

When economists tell them the baseline scenario in 2014 will be marked by sluggish growth and will persist over the medium-term, with downside risks clearly in the near-term, they just ignore that.

When critical risks to the outlook, which include lower than projected tax revenue collections, policy inconsistencies, financial sector instability, and global commodity prices fluctuations, are raised they close their eyes. When they are told the ill-conceived indigenisation policy has resulted in capital flight and is scaring away investors, they think it’s propaganda which must be blindly rejected.

Yet the fact is the economic environment and prospects remain grim, posing significant risks to the budget and financial stability.

Serious policy interventions are needed to restore fiscal and external sustainability, as well as reduce banking sector vulnerabilities.

The biggest barrier to progress is the residual Cold War mindset and discredited shibboleths of the past which Mugabe and like-minded Zanu PF officials are clinging onto.

Zimbabwe urgently needs a policy shift and reforms to get onto a sustainable and inclusive growth path to address fundamental issues, including company closures, unemployment, poverty and service delivery, not these inept interventions by incompetent officials.